Introducing myRA (pronounced my-R-A), a new retirement savings program for savers who do not have access to an employer sponsored retirement savings plan, such as a 401(k) or 403(b). We encourage you and your employees to understand this new savings program. It provides a benefit to both the employer and employee, with no fees and little effort.
The employee simply signs up online for a myRA and you, the employer, take the payroll deduction and automatically deposit it with the Treasury. It’s that simple! For employees who have not yet met the eligibility provisions of your plan, this is a great retirement savings plan for them. Do you have long term “part-time” employees that will never be eligible for the plan? This could be just the thing to get them to save towards a more comfortable retirement. It’s a win-win.
In his 2014 State of the Union address, President Obama announced that the U.S. Department of the Treasury was developing a new way for workers to start saving for the future. The myRA (“My Retirement Account”) program offers a new retirement savings account for individuals looking for a simple, safe, affordable way to start saving.
Key features of myRA include:
- Initial contribution of at least $25 and automatic ongoing contributions of $5 or more every payday;
- myRAs are available to any individual with an annual income of less than $129,000 or a couple with annual income of less than $191,000;
- Account will never go down in value and there are no fees;
- A retirement savings bond with the same variable interest rate as a low risk investment option available to federal government employees;
- It’s portable – not tied to a single employer;
- Rollover to a private-sector provider at any time;
- Build savings for 30 years or $15,000, then transfer to a private-sector provider; and
- myRAs are Roth IRAs with Roth tax advantages (taxes are paid up front, not at distribution).
Barbara Klein, QPA, QKA is the founder of 401kEssentials.com and President of Accrued Benefit Administrators, Inc. She has more than 35 years of experience in the retirement plan industry as an administrator, educator, speaker and author. Drawing from her experiences in the pension administration industry, Klein is the author of 401(k) ESSENTIALS For The HR Professional. She is credentialed by the American Society of Pension Professionals & Actuaries (ASPPA).NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice. Any opinions of the author(s) do not necessarily reflect the stance of Asset International or its affiliates.